Monday, February 18, 2008

Crude Oil Very Close To U.S.$100 Per Barrel

Today oil prices rose above U.S.$96 per barrel mark and is very likely that it may retest it's recent intra-day high of U.S.$100 per barrel mark. This will be a pretty bad news for everybody as it has the potential to disrupt global economic growth, inflate already heated prices index, interest rates can rise sharply, demand can slowdown, and so on. Financial markets which have been thrashed in the month of January 2008 and in early part of Feb have slowly started recovering may not afford to ignore threat of rising crude oil prices. Central bankers too must be feeling nervous, after all this problem is created by them by infusing huge cash into the financial system during past decade. Equity markets will initially ignore this fact but smart investors will take this well into account of implications of very expensive crude oil prices on the overall health of equity markets and thus equities will be volatile during this period.